Times Mirror Settles Suits Over Cable Deal : Media: Publisher of Los Angeles Times offers investors higher dividends for up to three years.

Times Mirror Co. announced an agreement Wednesday to settle all shareholder lawsuits that challenged the proposed sale of its cable television business to Cox Enterprises Inc.

Under terms of the settlement, which faces court approval, Times Mirror will offer investors an opportunity to earn higher dividends for up to three years by exchanging new shares of common stock for a new series of preferred stock.

In June, Times Mirror signed a definitive agreement to sell its cable operation in a $2.3-billion transaction that would form a new company controlled by Cox. Times Mirror’s stockholders, excluding trusts of the company’s founding Chandler family, would own about 20% of the new entity while retaining their common stock of Times Mirror, a consumer and professional information company that publishes the Los Angeles Times and several other newspapers.

In connection with the deal, Times Mirror had announced plans to cut its dividend by up to 80%. The company also said the Chandler trusts, which have 54% voting control of Times Mirror, would receive a new preferred stock with a fixed dividend that would insulate the trusts from the reduced payout on the common shares.

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That gave rise to the stockholders’ suits, which alleged that the transaction favored the trusts at the expense of other holders. The proposed settlement would not change the terms received by the trusts.

Under the settlement, Times Mirror’s other shareholders would have the option to swap their Times Mirror common stock on a 1-for-1 basis for new securities called “mandatory conversion preferred stock,” or exchange-preferred.

The exchange-preferred would carry a minimum annual dividend yield of 6.5% and would convert back to one share of common after three years. In the meantime, the exchange-preferred is expected to trade on the New York Stock Exchange, but Times Mirror would also have the right to redeem the stock before the three years is up.

The settlement also calls for Times Mirror to pay up to $6 million for the shareholders’ legal expenses.

Times Mirror’s common stock rose 25 cents a share to $31.875 in New York Stock Exchange trading Wednesday.